Record rate hike coming Aug 29, unless the Court grants a “stay”

Customers face a record increase in postage rates on Sunday, August 29, unless the U.S. Court of Appeals grants a “stay” request by the Alliance of Nonprofit Mailers and other associations representing commercial mailers.  The authority to raise rates well above general inflation was granted last November by the Postal Regulatory Commission to the United States Postal Service.  And USPS decided to use all of its authority, even though it has the right to “bank” or defer a portion for later years.

The regulator created formulae to allow hikes 5.5 percent and 7.5 percent above the increase in the Consumer Price Index, for what it considers “compensatory” and “noncompensatory” postal services, respectively.  When partial-year escalation in the CPI is included in the August increase, the postal agencies are raising rates an average of 6.9 percent.  These increases add onto the rate hikes in January 2021: 1.8 percent for First Class and 1.5 percent for the other categories.

The total postage rate increases in 2021 are slated to be 8.7 percent for First-Class Mail, 8.3 percent for Marketing Mail, and 10.3 percent for Periodicals Mail.  By now, mailers know the impact on their specific mix of mail, and what changes they can make to mitigate some of the hits.  Many mailers are making adjustments in both the amount and type of mail they send.   Marketing Mail for nonprofits varies quite a bit by type of mail:

Nonprofit Marketing Mail Rate Increases Aug. 29

Letters                                            +5.7%

Flats                                                +10.4%

Parcels                                            +8.6%

HD/Sat/CR Letters                      +10.1%

HD/Sat Flats                                 +14.6%

CR Letters, Flats, and Parcels    +13.9%

Total Nonprofit MM                     +7.8%

Stay Request

On Friday, July 23, the Alliance of Nonprofit Mailers, representing the nonprofit sector, joined several commercial mailer associations in requesting a “stay” of the new rates.  We and our allies renewed our request that the U.S. Court of Appeals for the D.C. Circuit stay, or put a hold on, the postal rate increases scheduled for August 29, 2021.  The stay would be in effect until the court makes its decision on our December 18, 2020 appeal of the rates authority created by the Postal Regulatory Commission, sometime after oral arguments on September 13, 2021.

You probably recall that we made a stay request seven months ago that was denied by the court because we did not show “the type of imminent and irreparable harm necessary for a stay.”

Why make the request again?  As we assert in our new request, “The basis for the Court’s denial of a stay no longer exists,” and “There is nothing speculative or ‘hypothetical’ about these rate increases: they will be the largest price increases levied on the Postal Service’s monopoly customers since the Act’s passage.”

We are not guaranteed to get a decision on the stay before August 29.  It is too early to say whether we will get one, but we are optimistic that we will get a ruling one way or the other before the 29th.

The Court knows when the price increases will go into effect.  There was a 13-day period between our February 16 reply brief and the Court’s March 1 denial of our initial stay request.  If a similar timeline holds here, then we would get a ruling on or around next Monday, August 23.

It is also possible that the Court will elect to hear arguments on the stay motion and the appeal together on September 13, which obviously is not ideal for the mailers and would not bode well.

Another rate increase in January 2022?

With late January only five months away, mailers have started asking whether there will be another CPI-based rate increase then.  The answer is, “maybe.”  USPS has so far refused to show its cards about the timing of next year’s pricing changes.  But the CPI is accelerating. The PRC rate cap formula is a unique 12-month formula that it created as a part of the ratemaking system in 2007.  So, the PRC cap moves more slowly than the monthly CPI announcements by the Bureau of Labor Statistics.

But inflation is accelerating.  As of the August CPI release, the postal cap was 1.3 percent, up from 0.9 percent a month earlier.  There are two more CPI releases before the usual October filing of January rates.  That would presage a CPI cap of just over 2 percent.  Savvy nonprofit mailers are already building a 2 percent- 2.5 percent rate increase for late January into their planning.